3. Theory of Money and Credit

This 1912 book is Mises’ first great theory. Mises agreed with Menger about the spontaneous emergence of money. No government is needed. Mises used a logical proof called the regression theory. It explained why money is demanded in its own right.

Five major contributions Mises made were: 1) the nature of money, 2) a theory of the value of money, 3) the presence of (Cantillon) redistribution effects, 4) purchasing power parity of exchange rates, and 5) a theory of the business cycle.

Lecture 3 of 10 from The Life, Times, and Work of Ludwig von Mises, a George and Joele Eddy Seminar.